Demonetisation: It’s 3 years to the day since the sudden announcement of demonetisation of Rs 500 and Rs 1,000 notes caught India with its pants down. Prime Minister Narendra Modi’s November 8 address had only takers who praised the great move to eradicate unaccounted money, black since black is all evil in our context. In the hailing and applause, everyday Indians stood in knee-killing queues to deposit their cash stash or to access their own money in ATMs. Some stood themselves in swelling queues or deputed the neighbourhood’s unemployed to stand-in for them at a price. Almost all the money made it back to the bank. The alleged hoarders moved money outside or converted it into other forms like gold, which is on the new hitlist. The huge unorganized sector, one never imagined its size, which dealt in cash alone was forced to move their money to the bank. Yes, over 100 people died in the queues and some committed suicide in abject shock.

The Prime Minister is a man who loves speeches and in one of these speeches soon after demonetization got people to count their legitimate savings and head to the deposit queue, he made a speech in Japan mocking people who didn’t have money for weddings. The audience laughed with him and at the plight of the people who didn’t have money for weddings, sadly the poor also believe in the sanctity of marriage, not all are live-in or live in sin, yet. This is the enduring image of the self-inflicted cut to the Indian economy’s jugular vein: Derisive laughter greeting the PM’s joke on the lack of money for people organizing weddings.

A close contender is another photo, of an old man in Gurugram, weeping uncontrollably in a bank because he lost his spot in the queue and would have to do it all over again. He was a retired soldier to boot.

Whatever was demonetisation’s core reason, it ended up denying oxygen to non-BJP parties to mount a strong contest in the elections to the Uttar Pradesh Assembly in 2017. If DeMo wasn’t enough, the coup de grace was the introduction of the Goods and Services Tax, at midnight July 1, 2017, which has become small and medium industries’ eternal hangover and has had multiple interventions, but the hit to the Indian economy has been near-fatal.


The aftereffects have been clear as daylight for those who were looking for the signs. The industrial output started sliding, the GDP projections, even under a new ever-changing base year formula, became circumspect, but the slide wasn’t seen as one. Instead, it was called a cyclical occurrence, an effect of the weakening of the world economy. If there’s no diagnosis, why bother fixing it? Soon, unemployment returned to a 40-year high, the bureaucracy tried to dismiss that too as a disaffected officer’s projection.

Worse was yet to come. People, who had lost their savings, were stocking up on the new notes with a vengeance, particularly the lurid pink Rs 2000 note. With saving for a rainy day again playing on the frontal cortex, consumption took the back seat, as pointed out by a recent oped in the Hindustan Times. The auto sector zoomed into reverse gear with alarming precision. A senior bureaucrat sought to blame the auto industry for an apparent confusion over manufacture of electric vehicles. Sadly, the electric vehicle law which was being negotiated was for 2- and 3-wheelers, but the sale of cars trickled down. Some showy Diwali purchase of 25 Mercedes Benzs were touted as the economy being ship-shape.

In the middle of all this, as Finance Minister Nirmala Sitharaman pointed out much later, the signs of a downturn became visible 2-3 months before the Lok Sabha elections 2019. But, hey, the Modi government was back with more MPs. Economists continued to warn the government that successive declines in industrial production and the emergence of static demand threatened to place India in an orbit that has been Brazil’s. They got shipped out of advisory bodies.

A day ahead of demonetisation’s 3rd anniversary, a retired finance secretary suggested black money can be further cut by demonetising the Rs 2000 note. After the first surgical strike on black money and the constitutional strike on Article 370 removing the special status given to Jammu and Kashmir, nothing shocks any more – people have resigned themselves to their fate. The pants have been at their ankles all this while. And the Indian economy continues to stumble.

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